As the hospitality industry struggles to mitigate the massive loss of revenue caused by the coronavirus pandemic, hundreds of hotel owners are filing lawsuits to force their property insurance providers to cover their financial casualties.
Meantime, state and federal lawmakers are considering legislation that would mandate U.S. insurance companies pay for business losses related to COVID-19.
Such a payout could surpass $600 billion, reported Best’s Insurance in May.
American Property Casualty Insurance Association, a trade group, puts the payouts even higher. In June, the association reportedly estimated payouts to would cost insurers $255 billion to $431 billion a month.
The amounts are not sustainable and would ultimately make many insurers insolvent, say insurance industry experts.
Hotel owners say they deserve payouts because they’ve paid premiums for years to cover high-loss scenarios such as the one they’re facing now.
In almost every case, insurers are refusing to pay, saying policies exclude losses caused by a viral plague or COVID-19 has not caused any physical damage to hotel properties that result in a stoppage of business.
It’s fixing to be an epic battle.
In this episode of Lodging Leaders, we examine the issue of business interruption insurance for hotels negatively impacted by the coronavirus pandemic.
We feature Sanjay Patel, CEO of MHG Hotels in Indianapolis who has filed a lawsuit against his insurance provider; Robert Zarco, a partner at the law firm Zarco Einhorn Salkowski & Brito in Miami who specializes in litigating business interruption insurance claims on behalf of business owners; Gregory Riehle, a lawyer and hospitality consultant and former CEO of the Resort Hotel Association, a hotel insurance group; and Robert Hartwig, Ph.D., a clinical associate professor and director of finance at the Center for Risk and Uncertainty Management at the University of South Carolina’s Darla Moore School of Business who’s co-authored a white paper about the un-insurability of businesses affected by viral pandemics.
Resources and Links
Since she was a teenager volunteering at senior-living facilities in Boston, Serena Lipton knew she wanted a career in senior housing. But she had a difficult time finding the college program she believed would educate and prepare her to serve in the senior-living industry. After graduating from Boston University School of Hospitality Administration and working as an analyst for JLL’s Senior Housing Valuation Advisory, Lipton finally found what she was looking for. This fall she enrolled in BU’s Master of Management in Hospitality with a new concentration in senior living. She and other students are on the cusp of what BUSHA believes is a massive shift in how Americans view aging and where opportunities lie for the hospitality industry.
Rainer Jenss of Nyack, New York, founded the Family Travel Association seven years ago to help parents and caregivers introduce children to the world through travel, whether that’s a yearlong trip around the world that Jenss and his family took or a weekend getaway to a nearby destination. To help the travel industry gauge what parents want when they take their kids on vacation, FTA conducts an annual study. The U.S. Family Travel Survey 2021 reveals the shift in mindset the COVID-19 pandemic has created in families planning a trip over the next 12 months. Hoteliers use can use the information to generate business and boost their strategies to recover and sustain business now and other the coming months.